In a significant turn of events, Bank Alfalah Limited (PSX: BAFL) announced on Friday that Hatton National Bank (HNB), one of Sri Lanka’s prominent financial institutions, has decided not to move forward with the acquisition of Bank Alfalah’s operations in Bangladesh. This decision comes after several months of negotiations and evaluations between the two banks, and follows communications regarding the offer and due diligence approvals from the respective central banks of Pakistan and Bangladesh.
The announcement was made by Bank Alfalah through a stock filing to the Pakistan Stock Exchange, revealing that HNB informed the bank about its decision. According to the filing, HNB’s CEO conveyed the news following a Board of Directors meeting on April 2, 2025, where it was resolved that the acquisition would not proceed. This marks the end of a potential deal that had been discussed over a series of disclosures dating back to the second half of 2024.
Bank Alfalah had previously made public details of HNB’s non-binding offer, which was initially shared in August 2024. In the following months, HNB received in-principle approval from the central banks of both Pakistan and Bangladesh to carry out the due diligence process for the potential acquisition. These steps seemed to pave the way for a smoother transition and a positive outcome for both banks. However, despite these developments, HNB’s decision to step away from the acquisition has raised questions in the market about the reasons behind the change in strategy.
This shift in HNB’s plans comes as part of the broader landscape of banking consolidation, where financial institutions across Asia and beyond are looking to expand their footprints in emerging markets. For HNB, the acquisition of Bank Alfalah’s operations in Bangladesh represented an opportunity to enter a growing market with substantial growth potential. Bangladesh, with its rapidly expanding financial sector and large population, has become a key area of interest for banks looking to tap into South Asia’s dynamic economies.
Bank Alfalah’s operations in Bangladesh, which are substantial in size, had attracted interest from various potential buyers over the years. The sale was seen as part of Bank Alfalah’s broader strategy to focus on its core markets and streamline operations. Given that HNB was among the shortlisted candidates, the decision to halt the acquisition is viewed as a setback for Bank Alfalah, which had anticipated the transaction would be a key step in its regional business strategy.
The reasons behind HNB’s decision to withdraw from the acquisition remain unclear, but such strategic changes often arise from various factors, including market conditions, financial performance, and internal business priorities. The bank’s Board of Directors may have reassessed the deal based on the evolving economic landscape, regulatory concerns, or the specifics of the due diligence findings, which could have influenced their final decision.
This development is likely to have implications for both banks. For Bank Alfalah, the decision to discontinue the acquisition may result in a reassessment of its plans for its operations in Bangladesh and its overall regional strategy. Similarly, HNB will need to evaluate other avenues for growth and expansion, especially in the context of its regional ambitions and competitive positioning in the South Asian market.
In conclusion, while the potential acquisition of Bank Alfalah’s Bangladesh operations by Hatton National Bank was once seen as a promising development for both parties, the recent decision to cancel the deal marks a significant shift. It highlights the complexities and challenges involved in cross-border banking acquisitions and emphasizes the need for thorough strategic alignment in such high-stakes deals. Both banks will likely explore new strategies moving forward, and the future of Bank Alfalah’s Bangladesh operations remains to be seen.